Holley Stock Earnings Reports

Key points for investors: Holley reported Q1 2026 net sales of $147.3 million, down 3.7% year-over-year, primarily due to elevated distributor inventories and unusually severe winter weather that pushed some demand out of the quarter. Adjusted EBITDA was $27.3 million (essentially flat YoY) and adjusted EBITDA margin expanded to 18.5% (+71 bps). Net income improved to $7.3 million and adjusted net income rose to $5.7 million. Free cash flow was negative $6.3 million but improved by ~$4.5 million year-over-year; management expects meaningful FCF improvement through the year as inventories normalize. The company delivered $6.5 million of cost savings in Q1 ($3.8M purchasing/tariff savings; $2.7M operational improvements).

Strategic actions: Holley closed the HRX acquisition (adds premium motorsport safety/apparel and European exposure) and launched a portfolio rebalancing program: exiting ~5 brands, consolidating ~5 facilities, removing ~11,000 SKUs (~25% by count), and reducing ~100k sq ft of warehouse and ~9% of workforce. Management expects the rebalancing to generate >$15 million of one-time net cash, expand adjusted EBITDA margin by ~75–150 bps, deliver at least $1M of annualized benefits, modestly improve leverage (~0.15x) and raise inventory turns by ~5%.

Guidance and balance sheet: Full-year net sales guidance was updated to $610M–$640M to reflect the net ~$15M revenue impact from portfolio optimization; adjusted EBITDA guidance remains unchanged at $127M–$137M. Inventory-reduction target for the year is $10M–$15M. Covenant net leverage at quarter-end was 3.84x (down 0.48x YoY) and management expects to finish the year below 3.5x. Early Q2 trends are constructive: April showed mid-single-digit growth (management cited ~6% growth in April) and distributors’ inventories are normalizing. Management continues to pursue 5–10 disciplined bolt-on acquisitions over 24 months targeting founder-led businesses with $5M–$10M revenue and strong margin profiles.